Supreme Court Effectively Puts Aereo Out of Business

'Aereo is not simply an equipment provider'

The official word on Aereo came down from the Supreme Court today, and the word is "no."

The ruling came down 6-3 against the streaming TV company. In an opinion written by Associate Justice Stephen Breyer, the court directly contradicted the assertion most fundamental to Aereo's business model. "Aereo is not simply an equipment provider," Breyer wrote.

"Aereo sells a service that allows subscribers to watch television programs, many of which are copyrighted, virtually as they are being broadcast," he continued. "Aereo uses its own equipment, housed in a centralized warehouse, outside of its users’ homes. By means of its technology, Aereo’s system 'receive[s] programs that have been released to the public and carr[ies] them by private channels to additional viewers.'"

A statement from Aereo CEO Chet Kanojia expressed disappointment in the ruling: “Today’s decision by the United States Supreme Court is a massive setback for the American consumer. Free-to-air broadcast television should not be available only to those who can afford to pay for the cable or satellite bundle.” Kanojia also quoted Justice Antonin Scalia's dissent: "The Court vows that its ruling will not affect cloud-storage providers and cable television systems, but it cannot deliver on that promise given the imprecision of its results-driven rule."

Complainant ABC issued a brief statement in support of the court's decision: “We’re gratified the Court upheld important copyright principles that help ensure that the high-quality creative content consumers expect and demand is protected and incentivized." Fellow broadcaster Fox also echoed the sentiment, casting the ruling and presumptive shuttering of Aereo as a win for consumers: “21st Century Fox welcomes the U.S. Supreme Court’s ruling, a decision that ultimately is a win for consumers that affirms important copyright protections and ensures that real innovation in over-the-top video will continue to support what is already a vibrant and growing television landscape.”

Aereo financier Barry Diller disagreed, saying that the ruling hurt consumer choice. "It's not a big [financial] loss for us, but I do believe blocking this technology is a big loss for consumers, and beyond that I only salute Chet Kanojia and his band of Aereo'lers for fighting the good fight," he told CNBC. "We did try, but it's over now."

The case has been seen as a litmus test for innovations in several different industries—tech folks contended that ruling against Aereo would stifle innovation; broadcasters worried that a ruling in the company's favor would call into question the legitimacy of hotly contested retransmission consent fees, paid by cable operators to include broadcast networks in their lineups. Breyer's opinion reinforced the legal status of retrans, citing the Cable Act, and as to the concerns about a chilling effect on other digital innovations, he remained unconvinced. "Given the limited nature of this holding," Breyer wrote, "the Court does not believe its decision will discourage the emergence or use of different kinds of technologies."

Speaking to Bloomberg TV in April, Diller said this ruling would almost certainly scuttle the company. "[Aereo] would probably, I say 'probably' because I can't see any path for it, probably not be able to continue in business," Diller told the network. "We could probably pay retransmission consent dollars, but the value proposition would go out of the game because Aereo is a low-cost way of receiving over-the-air broadcast. That's the platform."